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Peugeot, Suzuki, Renault showing interest in acquiring ailing Proton

POSTED BY Nigel Andretti ON 28 September 2016

FRENCH automotive group PSA (owners of Peugeot-Citroen) has confirmed an interest in buying into Malaysia’s ailing Proton carmaker.

Proton owner DRB-Hicom is reportedly looking to sell its Lotus and Proton brands that remain only fringe players in the automotive industry.

According to Reuters, Renault and Suzuki are also interested in taking over the two brands.

“Peugeot confirms it is responding to a request for proposals initiated by Proton and its shareholder DRB-Hicom,” a spokesman for the company said this week.

The news of the potential sale comes just a few months after Lotus confirmed an all-new Elise is due to arrive in 2020 and the brand is on track to make a profit for the first time in 20 years.

A deal with PSA Group with give the French firm the opportunity to expand into sports cars while for Renault, acquiring Lotus’ engineering know-how could give it a boost as it gets ready to revive its Alpine brand.

The addition of Proton would open new opportunities in Asia at the lower end of the market currently not covered by Peugeot or Citroen.

Proton’s downward spiral as an automaker has been obvious for some years.

What used to be a company that dominated the Malaysian market in the 1990’s has been relegated to an afterthought, thanks in large part to a poor perception of the quality of its offerings as well as weak after-sales services.

Proton’s performance is so weak at this point that RM1.5 billion in aid from the Malaysian government has failed to steer the company into calmer waters.

On Sept 9, DRB-Hicom disclosed in a stock exchange filing that a further RM250mil in cash would be provided by Jan 31, 2017 as part of a second subscription agreement.

Among the conditions is that the carmaker must seek and identify in a year, a “strategic and renowned partner” which will assist in research and development efforts so that it can become a competitive player in the international automotive scene.

For the buyers circling Proton, the main opportunity lies in the company’s modern but underused plants in Tanjong Malaim and Shah Alam that can produce up to 400,000 cars a year — but now jointly producing just 100,000 annually.

These plant, in the right hands, could provide a very strategic opportunity to build its models there and capitalise on a ripening Southeast Asian market.

As for Lotus, a Renault takeover would be opportune given its plans for Alpine and could potentially allow the brand to share platforms across the two sports car brands.

Alpine is due to re-launch with a two-seat sports car aimed at the Porsche Cayman and Alfa Romeo 4C.

Lotus has had a tumultuous recent past highlighted by former CEO Dany Bahar’s bold attempt to re-position the brand as a rival to Ferrari and Porsche with six all-new models between 2010 and 2015. That plan turned out to be short-lived and Proton took more direct control over the brand and has focused on updating the existing Elise, Exige and Evora models.